Forbes Fintech 50 2018: The Future Of Lending

Lending was among the earliest segments of finance to be disrupted by the technology revolution currently sweeping the industry. Alternative lenders swooped in as big banks pulled back on making small business and personal loans in the wake of the financial crisis. As a result, the nine lenders on the Forbes Fintech 50 for 2018 are some of the largest and most established companies we feature on this, the third edition of our list. Two of the most prominent U.S. digital lenders—LendingClub and OnDeck—have already gone public (though the markets have not looked on them kindly). Meanwhile, behemoths ranging from retailer Amazon to investment bank Goldman Sachs have opened lending operations that emulate some of the best of what the startups have to offer.

Affirm, San Francisco

Makes instant three, six and 12 month loans for purchases from 1,500 online merchants. A handful of sellers subsidize 0% rates, but most loans carry annual interest rates of 10% to 30%. Affirm says its machine learning technology allows it to lend to consumers who might not qualify for credit cards and that repayment helps them build credit histories.

Bona fides: More than 1 million loans issued. Partners include Wayfair and Expedia.

Cofounder & CEO: Max Levchin, 42, a cofounder of PayPal and former chairman of Yelp

Digital-only mortgage originator estimates the loan an applicant qualifies for within three minutes using stated income and a credit score check. Once borrower uploads required documents, company says, it usually completes underwriting and issues a “verified pre-approval letter” within 24 hours, allowing house hunters to compete with all-cash buyers. Better Mortgage gets paid by the institution buying the loan, not directly by consumers, and uses its proprietary software to match the two. A matching guarantees assure borrowers they’re getting a fair deal.

Bona fides: Fannie Mae and five of nation’s six largest banks buy its loans.

Speeds up the mortgage approval process at the nation’s largest lenders with its cloud based white label software. Prospective borrowers can link to online bank statements, tax returns and pay stubs. That chops days off the approval process and reduces document fraud. Plans to expand its services this year to auto, student and other lenders

Provides on-the-spot financing for home improvement projects (with loans up to $65,000) via a network of contractors and bank partners -- without itself taking on the risk of defaults. Most borrowers don’t pay a dime in interest thanks to zero-interest promotional periods that last from 6 to 60 months. Recently began offering financing at doctor, dentist and veterinary offices.

Bona fides: Has facilitated over $10 billion in loans

Cofounder & CEO: Billionaire David Zalik, 44, who skipped high school, then dropped out of college to run his first startup

Four year-old online lender started out providing bridge loans to fix and flip housing investors, a historically underserved segment. With original product now available in 25 states, LendingHome has expanded into personal mortgages in 14. Also offers investments in its flip loans to accredited investors.

Bona fides: $2 billion in loans made; 10,000 homes financed

Cofounder & CEO: Matt Humphrey, 30, a Forbes 30 Under 30, who sold a daily deal site for $100 million when he was 24

Approves developing-world borrowers who lack a credit history for micro-loans of between $10 and $500 by crunching 10,000 data points---from financial transactions to mobile games played---from an applicant’s smartphone.

Bona fides: Has made more than 4.5 million loans, with a repayment rate above 90%.

Founder: Shivani Siroya, 34, who did a stint at the UN Population Fund where she interviewed 3,500 people in nine developing countries about their relationship with money

Uses alternative data such as education, employment history and whether applicants know their own credit score to underwrite and price loans. After five years of training its algorithms, it now approves 47% of loans without human intervention and with some of the lowest default rates in the industry. Last year launched white-label platform to power lending for banks and credit unions. Its first client is digital-only startup BankMobile.